New Delhi / Lucknow: The central government is reportedly considering reducing its stake in four public sector banks to 75 per cent to comply with minimum public shareholding norms, while also exploring another round of consolidation in the banking sector.
According to a report by The Economic Times, the banks under consideration are Central Bank of India, UCO Bank, Punjab & Sind Bank and Indian Overseas Bank. The proposed reduction would increase public shareholding in these lenders, although the timing and method of the stake sale would depend on market conditions.
The report also said the government is preparing for another round of consolidation among state-owned banks, with two lenders potentially being identified for privatisation. NITI Aayog has reportedly shortlisted Central Bank of India and Indian Overseas Bank as possible candidates.
The government’s long-term objective is understood to be the creation of three to four large public sector banks. In the Union Budget for 2021-22, the Centre had announced plans to privatise two public sector banks, apart from IDBI Bank, as well as a general insurance company.
According to an official cited by The Economic Times, the immediate priority is to increase public shareholding in the four banks over the next year. While individual banks may raise funds from the market based on their own strategies, the government is also considering selling its shares through an Offer for Sale (OFS), depending on prevailing market conditions.
The reported plans indicate a possible shift in the structure of public sector banking, combining efforts to meet shareholding requirements with broader consolidation and privatisation initiatives. However, the proposals remain under consideration, and no final decision has been announced in the report.
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